GIIA membership surpasses 100 as investors court governments

More than one hundred of the world’s leading infrastructure investors and advisers have now joined the Global Infrastructure Investor Association (GIIA), which has seen eight years of year-on-year growth since it was founded in 2016.

Augment Infrastructure, a US-based fund manager, and Aware Super, one of Australia’s largest profit-for-member superannuation funds, are the latest to join. The total value of members’ infrastructure assets under management has now more than tripled to US$1.65trn (€1.51trn) across 70 countries

“Augment is a DC-based firm focusing on Asia and Latin America, both areas where we are keen to grow,” says GIIA’s CEO Jon Phillips. “And I think the very significant capital based in Australia is increasingly realising the important role which our organisation can play in giving them access and better understanding of the UK and European landscapes in particular.”

GIIA is looking to further expand membership internationally, emphasising its networking and convening role. “I have just one message to communicate to infrastructure leaders – come join the band,” Phillips says.

GIIA has clear role in lobbying governments. “This is the year where half of the world gets to vote and given that infrastructure is never far away from politics this is a very significant factor in our work in 2024,” Phillips continues.

The political backdrop to infrastructure investing in the UK has become particularly challenging. The screeching U-turn on the major high-speed rail project, HS2, by the UK government was not so important in terms of the direct effect it had GIIA members – the project was government funded. But, says Phillips, it was “very significant in setting the tone for long-term investment in the UK”. The failed wind auction was another signal that the UK government is “just not close enough to understand investors’ perspectives”.

GIIA takes the temperature among investors with a poll every six months. “We have seen the UK fall from most favoured developed nation for investment right down to the bottom,” says Phillips. “Much of this downfall reflects a frustration with UK regulation. The UK has very lofty ambitions, but in reality it has a tremendous amount to do.”

GIIA worked closely with Richard Harrington, a member of the House of Lords, in his review into increasing foreign direct investment. In November, the government said it had accepted all of the “headline recommendations”. Phillips says: “What we need now is concrete evidence that the government is [really] taking his recommendations on board and making changes. They have a long way to go to rebuild confidence.”

One crucial aspect of this according to Phillips is “the pace at which decisions are made”. He says: “Take hydrogen, where the UK was initially in the lead in considering innovation, but that lead has been completely lost to the US as a series of swift US government actions have catapulted it to the top of the investment league table.”

Recent polls all point to a Labour government winning the next general election in the UK, now expected in the autumn. The part is now led by Kier Starmer who is more representative of centre-left politics than his predecessor Jeremy Corbyn. “The consensus is that there has been a significant shift in Labour Party policy compared to where we were under Jeremy Corbyn,” says Phillips. “Whilst there is a degree of circumspection on the detail of policy, it is certainly true that the mood music has improved immensely.”

The EU is also at a “crucial Inflexion point”, says Phillips. “We are about to have major elections in June which will create a new [European] Commission and a new parliament.”

GIIA has worked closely in the last year with the Commission, particularly in areas such as transport and energy. “We are very keen to ensure that policy making is still developed in consultation with industry, and we will need to establish new relationships and deepen existing ones once that election has taken place,” Phillips says.

There has been a “push-back” regarding net-zero plans, but Phillips remains optimistic. “It is hardly surprising that there is an increasing realisation that some of the time scales in place for net zero are slipping,” he says. “But I don’t think investors are fundamentally concerned that we are going to see any change in the direction of travel. That is irreversible. Rather it is simply a question of timings and what I would characterise as simply bumps in the road.”

The biggest uncertainty surrounds the US election. “It is hard to predict what direction a second term for President Trump would take when it comes to infrastructure, and it is clear that he is less committed to the environmental agenda than President Biden,” Phillips says. “Maybe we will see some changes, but of course any significant changes would require the Republicans not just taking the presidency but also having control of both houses. That means there are several ‘ifs’ along the road.”

Phillips also points out that individual Republican States are disproportionately getting the majority of the benefits from the Inflation Reduction Act (IRA). “Overall, the penny has dropped on the US’s crumbling infrastructure. It is noticeable that both the [Infrastructure Investment and Jobs Act] and the IRA were passed on a bipartisan basis because of a united agreement on the need for infrastructure renewal. So, I think it is very unlikely we will have any fundamental change.”